Cancer drugs remain among the most expensive medicines in healthcare. While innovative treatments bring hope, their high cost often restricts access for patients and strains health budgets.
Generic oncology drugs, both small-molecule generics and biosimilar,s have emerged as the most powerful tool to improve affordability.
Their pricing, however, depends on a variety of strategies shaped by patents, competition, regulation, and government procurement policies.
Below are seven detailed pricing strategies that explain how generics are priced and why costs differ so widely across the globe.
1. Patent expiry and natural price erosion
What it is: Patent expiry marks the point when exclusivity for a branded drug ends, allowing generic manufacturers to enter the market. This transition sets the stage for natural price erosion.
How it works: Brand-name oncology drugs can maintain high prices for years because no competition exists. Once the patent expires, regulators approve generic versions that are chemically identical and therapeutically equivalent. Multiple manufacturers compete to capture market share, pushing prices downward. The sharper the competition, the steeper the price decline.
Impacts: Patients gain affordable access, insurers save substantially, and healthcare systems can allocate budgets more effectively. However, originator companies lose revenue streams, which can impact their funding for research and development.
Examples: The case of imatinib (Gleevec) in the United States illustrates this effect vividly. After losing exclusivity in 2016, the price of generic imatinib plummeted by more than 99% between 2017 and 2023, making a once high-cost leukemia treatment widely affordable.
Why it matters: Patent expiry is the most predictable and impactful event in oncology drug pricing. It reshapes market dynamics almost overnight, creating opportunities for affordability but also shifting the innovation–access balance.
2. Competition-driven markets
What it is: The degree of competition among generic manufacturers is one of the strongest determinants of price levels in oncology.
How it works: In markets with many generic producers, prices decline rapidly because each company undercuts rivals to secure contracts. Conversely, if only a few firms participate, prices may stabilize or even increase, especially if one supplier dominates. The market structure—whether open competition or oligopolistic—dictates long-term price behavior.
Impacts: Competition ensures lower prices for patients and healthcare systems, but intense competition can drive profit margins so low that manufacturers withdraw. This exit reduces supply diversity and creates vulnerability to shortages.
Examples: In the U.S., oncology injectables such as methotrexate have experienced repeated shortages. Thin margins discourage multiple manufacturers from staying active, leaving just one or two companies to meet demand. If one supplier faces production issues, prices can suddenly spike.
Why it matters: Healthy competition is a double-edged sword. It drives down costs, but when carried to extremes, it risks undermining supply stability and patient safety.
3. Tender-based procurement in Europe
What it is: Europe commonly uses centralized tenders for purchasing oncology generics, making procurement design a major factor in price determination.
How it works: Health systems or hospitals invite manufacturers to bid for supply contracts. The lowest bidder often wins exclusive rights, leading to steep discounts. However, single-winner tenders risk instability if the chosen supplier cannot meet demand. To address this, many European countries are shifting toward multi-winner tenders that distribute contracts among several suppliers.
Impacts: Tendering delivers substantial savings for public healthcare systems, sometimes cutting drug costs by half or more. Yet, the downside is potential treatment disruption during shortages or supplier withdrawals.
Examples: A well-known case involved Aspen, a pharmaceutical company accused of excessive pricing for six cancer drugs in Europe. In 2020, the European Commission forced Aspen to reduce prices by 73%, setting a precedent for stronger regulatory oversight.
Why it matters: Procurement models determine not only how much money health systems save, but also whether supply chains remain resilient. Europe’s experience shows that price efficiency must be balanced with reliability.
4. Volume-based procurement in China
What it is: China’s Volume-Based Procurement (VBP), also known as the “4+7” policy, is a centralized national program that uses bulk purchasing power to negotiate lower prices.
How it works: The government aggregates demand from multiple provinces and invites manufacturers to bid for contracts. Winners secure high-volume sales in exchange for offering steep discounts. This model ensures scale for manufacturers while delivering affordability for patients.
Impacts: The average price cut for oncology generics under VBP has been around 52%, making life-saving drugs accessible to millions of patients who previously could not afford them. For manufacturers, the model rewards efficiency but squeezes out those unable to operate at lower margins.
Examples: Drugs like imatinib and EGFR tyrosine kinase inhibitors were included in early VBP rounds, resulting in both sharp price reductions and rapid increases in usage across China.
Why it matters: China has demonstrated how a strong state-led procurement model can shift national affordability almost overnight, serving as an example for other emerging economies.
5. Price regulation in India
What it is: India relies on direct government intervention through pricing caps and trade-margin regulation to keep oncology drugs affordable.
How it works: The National Pharmaceutical Pricing Authority (NPPA) sets maximum permissible trade margins for anticancer drugs, forcing manufacturers and distributors to lower final retail prices.
Impacts: This intervention has had a massive impact on patient affordability. In 2019, price caps on 42 anticancer medicines reduced costs by up to 85%, cutting out-of-pocket expenses drastically.
Examples: NPPA regulation made costly treatments such as trastuzumab and docetaxel far more accessible to Indian patients. This move also reinforced India’s reputation as a supplier of affordable generics to low- and middle-income countries.
Why it matters: India shows that regulatory policy can be as powerful as competition in lowering prices, especially in countries where patients bear a large share of medical expenses.
6. Biosimilars and biologic competition
What it is: Biosimilars are near-identical versions of biologic drugs, such as monoclonal antibodies and immunotherapies, which often dominate oncology spending.
How it works: After biologic patents expire, biosimilars are launched following rigorous testing to prove clinical equivalence. These products compete with reference biologics in hospitals and cancer centers, often under procurement contracts.
Impacts: Biosimilars lower treatment costs for complex biologics, broaden access to cutting-edge therapies, and reduce dependency on costly originators. However, adoption depends heavily on physician confidence and regulatory substitution rules.
Examples: In Europe, biosimilar trastuzumab and bevacizumab quickly gained market share, significantly reducing costs. Looking ahead, biosimilars for PD-1 and PD-L1 inhibitors are expected by 2028–2029, likely driving another major wave of price reductions.
Why it matters: Biosimilars represent the next frontier of cost savings in oncology. Their expansion into immunotherapies could reshape global spending patterns.
7. Access and affordability in low- and middle-income countries (LMICs)
What it is: Despite falling global prices, LMICs face unique barriers that keep oncology drugs unaffordable for many patients.
How it works: Weak domestic manufacturing, fragmented supply chains, high import duties, and limited public insurance mean that patients often pay out of pocket. Even when generics exist, they may not reach patients at globally competitive prices.
Impacts: Patients in LMICs face disproportionate financial burdens, and treatment access remains highly unequal. This widens the survival gap between high-income and resource-constrained countries.
Examples: Biosimilar trastuzumab is affordable and widely used in Europe, yet remains out of reach for many patients in Africa and Southeast Asia due to pricing and distribution barriers.
Why it matters: Without targeted strategies for LMICs, the promise of generics remains incomplete. Ensuring equity in cancer care requires not just lower global prices, but also local mechanisms to pass those savings to patients.
Final words
The global oncology generics market illustrates how policy, competition, and procurement interact to shape affordability. Patent expiry and competition naturally lower prices, while tenders, regulation, and centralized procurement accelerate savings in regions like Europe, India, and China.
Biosimilars are redefining biologic affordability, but access gaps in LMICs show that global price declines do not always translate into equitable treatment.
Looking ahead, the entry of PD-1 and PD-L1 biosimilars will be pivotal in reshaping global cancer drug economics. The challenge is ensuring these savings reach patients everywhere while maintaining stable and sustainable supply chains.
FAQs
Why do prices of oncology drugs drop after patent expiry?
Prices fall because once a patent expires, generic manufacturers can produce the same medicine. With multiple suppliers entering the market, competition drives down costs quickly. For example, imatinib in the U.S. saw its price fall by over 99% within a few years of losing exclusivity.
How does competition affect generic oncology pricing?
The more manufacturers that produce the same drug, the sharper the price decline. However, if margins get too low, some companies exit the market, reducing supply diversity and increasing the risk of shortages.
What role do tender-based procurements play in Europe?
Europe relies on tenders where healthcare systems invite suppliers to bid for contracts. While single-winner tenders achieve steep discounts, they can cause instability if the supplier cannot meet demand. Multi-winner tenders are increasingly being used to balance affordability with reliable supply.
What is China’s volume-based procurement (VBP) policy?
China’s VBP program, also called the “4+7” policy, centralizes demand and negotiates national contracts. This approach has reduced oncology generic prices by around 52% and made treatments widely affordable.
How does India regulate cancer drug prices?
India’s National Pharmaceutical Pricing Authority (NPPA) sets price caps and trade-margin limits. These measures reduced the cost of 42 cancer drugs by up to 85% in 2019, significantly lowering out-of-pocket spending.
Are biosimilars as effective as branded biologics?
Yes. Biosimilars undergo rigorous regulatory testing to confirm they are clinically equivalent to their reference biologics. They offer the same therapeutic benefits but at lower costs, expanding access to advanced therapies.
Why are oncology drugs still expensive in low- and middle-income countries (LMICs)?
LMICs face barriers such as weak local production, high import duties, and fragmented supply chains. Even when global prices drop, patients in these regions often pay much more or cannot access the medicines at all.
What are the risks of aggressive price cuts in oncology generics?
Very low prices may discourage manufacturers from staying in the market, especially for complex injectables. This can lead to shortages and sudden price spikes when supply becomes unstable.
What future trends will shape oncology generic pricing?
The most important development is the upcoming launch of PD-1 and PD-L1 biosimilars around 2028–2029. These will likely cause major price drops in immunotherapy, one of the most expensive areas of oncology.
How do pricing strategies differ across countries?
The U.S. relies mainly on competition, leading to rapid price drops but also shortages. Europe uses tenders, increasingly favoring multi-winner models. China employs VBP to secure deep discounts. India applies direct regulatory caps, while LMICs still struggle with affordability and access.
